Suppose the government of a country starts a system designed to ensure that depositors in a bank do not lose their money, even if the bank goes bankrupt. Banks will have to pay a premium to a Central Deposit Assurance Corp, ensuring that depositors do not lose their deposits. Which of the following is likely to be true in such a situation?
a. Safer banks, with a higher net worth, would pay a
lower premium, while riskier banks, with a lower net worth, would pay a higher premium.
b. Banks with a high net worth would pay a high premium, while banks with a low net worth would pay a low premium.
c. The incidence of bank runs would increase.
d. The willingness of banks to make loans would decrease.
a
You might also like to view...
Which of the following shifts the supply curve for oranges?
A) disastrous weather that destroys about half of this year's orange crop B) a newly discovered increase in the nutritional value of oranges C) an increase in the price of bananas, a substitute in consumption for oranges D) an increase in income for all orange consumers
The current deficit is
A) the deficit minus government investment. B) the deficit plus net interest payments. C) the deficit minus current expenditures. D) the deficit minus depreciation.
If the government were to decrease corporate income tax, we would predict a:
A. downward movement along the aggregate demand curve. B. shift in aggregate demand to the right. C. shift in aggregate demand to the left. D. shift straight down of aggregate demand.
At the national level, a Board of____________ runs the Federal Reserve.
a. Representatives b. Presidents c. Governors d. Banks